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Silver Spring Networks skyrockets 29 percent in first day of trading

Mar 13, 2013 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) --
REDWOOD CITY -- Silver Spring Networks, one of the leading companies in the highly competitive "smart grid" space, celebrated its long-awaited IPO on Wednesday, with shares skyrocketing 29 percent in the first day of trading.

The company, largely backed by Foundation Capital, made 4.75 million shares available -- 1 million more than originally planned -- due to high demand from investors. It priced the IPO at $17 a share, the midpoint of its stated $16-$18 range, giving it a total take of $81 million and an estimated initial valuation of about $754 million. All the shares came from the company, as early investors kept their stakes.

"This was a really wonderful milestone," CEO Scott Lang said in a telephone interview from New York, after ringing the opening bell of the New York Stock Exchange. "Our investors see the size of this market."
Lang said there was a lot of "high quality" demand from investors, and the decision was made to make an additional 1 million shares available to satisfy "some of" that demand.

"Silver Spring has been one of the most highly anticipated U.S. cleantech IPOs ever," said Dallas Kachan, managing partner of cleantech research firm Kachan & Co. "Its first-day performance is nice to see, but save the applause. By pricing at the middle of its range, upward movement was likely."
Kachan said that
what really matters is the stock's long-term performance. SolarCity, which celebrated its IPO in December, saw its stock slide on lower-than-expected earnings.

Silver Spring, based in Redwood City-based, first filed for an IPO in July 2011, and as the months passed many questioned whether it would be able to pull it off. The company had originally hoped to raise $150 million; in its Feb. 26 prospectus, it said it would offer just 3.7 million shares and raise $63 million.

Silver Spring Networks was founded in Milwaukee in 2002 and provides the hardware, software and services that allow the smart grid to function. It has inked deals with several leading utilities, including PG&E and Baltimore Gas & Electric. The smart grid market is booming internationally in Brazil, Germany, China, South Korea and elsewhere.

The Department of Energy and the nation's leading utilities are eager to make the electric grid more reliable, secure and efficient, from the power plant and transmission lines to homes and offices. Silicon Valley's telecommunications and software expertise have been key to these efforts.

Other smart grid startups in the valley have been acquired, including San Mateo-based eMeter, which was purchased
by Siemens in 2011. However, the deployment of smart meters in the United States has slowed as federal stimulus dollars have dried up.

A small but vocal group of consumers in Northern California, Maine and elsewhere have voiced concerns about privacy and perceived health effects of smart meters, and in some jurisdictions have demanded the right to "opt-out" of having smart meter devices installed at their homes.

In its early days, Silver Spring Networks tried to raise money from investors in the Midwest with no luck. That changed when its executives had a meeting with Foundation Capitol in Menlo Park, which was keen to invest in companies that were improving energy efficiency from the demand side.

Foundation doubled down on its bet, purchasing $12 million of Silver Spring Networks stock at the IPO price in what the company called a "concurrent private placement" in its filing with the Securities and Exchange Commission. Foundation and its affiliated entities own more than a quarter of the company after the IPO, the filing said, at 27.7 percent.

Silver Spring Networks moved to Silicon Valley, and Foundation's Raj Vaswani became the company's chief technology officer. The company is also backed by Kleiner Perkins Caufield & Byers, Northgate Capital Partners and Google (GOOG) Ventures.

$17
IPO share price
$21.89
Share price at the close of trading Wednesday
28.8 percent
Percentage gain on first trading day
4.75 million
Number of shares made available
$754 million
Company's initial valuation
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